For Canadian Muslims, next to home financing, the most demand for a Shariah compliant financing program is that for automobile financing. Recently a new firm, Amana Auto Finance Canada (AAFC) was incorporated to launch such a financing program for the Muslim market in Canada.
Amana Canada Holdings, a main shareholder of AAFC, was established to provide alternative financial services and solutions to the Canadian Muslim community and other groups based on socially responsible concepts of justice and equity to all stakeholders. The company’s business is to provide alternative types of solutions for auto financing and other financing products as well as investment options to businesses and individuals. There is a dearth of compliant and fair-priced products available to this untapped Muslim community which is one of the fastest-growing communities in Canada.
AAFC is led by one of Canada’s leading auto finance executives, Peter R Andrew, who has over 40 years of experience in the industry. This includes 35 years at General Motors Acceptance Corporation of Canada where he was the general director of operations for over a decade. In addition, Andrew was the director of consumer credit operations at Ally Credit Canada and a national operating officer and head of strategy for RBC Automotive Finance.
In the upcoming year, AAFC aims to have a Canadian financial institution to provide a competitive funding platform for vehicle purchasing or leasing. Though initially to be funded by a Canadian entity, there would be possibilities of offering it via Sukuk structures to Islamic financial institutions. Such products would offer a unique diversification opportunity to Islamic banks and funds as the Canadian financial markets are known for their strong regulatory compliance and oversight, thus potentially offering a Shariah compliant investment product with a strong investment grade rating.
AAFC will leverage on the expertise of a leading Canadian auto finance service provider to provide the platform to receive applications, adjudicate, fund and service the accounts created under the program. AAFC will retain full responsibility for establishing risk appetite, operating performance, product marketing and community awareness/engagement.
AAFC will set up an online portal for the community to access related information and be pre-approved for a car loan. Depending on the type of vehicle the consumer would be seeking, they would be assigned to the desired car dealership. The portal may also be used by participating automobile dealers to submit applications where the community member has not self-identified but whose first contact is through the dealership.
As the Muslim community continues to grow in Canada, it is expected that more firms such as AAFC will emerge to meet the community’s financial needs.
Rehan Huda is a director at Amana Canada Holdings. He can be contacted at [email protected].